China Banking Regulatory Commission, Circular on Matters Relevant to Regulation of the Cooperation Between Banks and Trust Companies on Wealth Management Business

中国银行业监督管理委员会关于规范银信理财合作业务有关事项的通知

September 04, 2010 | BY

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Co-wealth management business between banks and trust companies now being controlled.

Clp Reference: 3610/10.08.12 Promulgated: 2010-08-12 Effective: 2010-08-12

Issued: August 12 2010
Effective: as of date of issuance

Applicability: The phrase “cooperation between banks and trust companies on wealth management business” means that commercial banks entrust the funds of individual clients (including private banking clients) and institutional clients with trust companies for wealth management purpose, which shall manage, utilise or dispose of the funds as a trustee according to the stipulations in the trust document.

Commercial banks' promotion of trust products issued by trust companies shall not be governed by this Circular (Article 1).

Main contents: Where a trust company engages in wealth management business in cooperation with a bank, the term of trust products may not be less than one year (Article 3). The balance of financing-type wealth management business of a trust company shall be no more than 30% of the total balance of wealth management business. The trust products of trust companies may not be open-ended products (Article 4).

Where a commercial bank and a trust company jointly engage in investment-type wealth management business, their funds, in principle, may not be invested in the equity of non-listed companies (Article 5). In regards to the cooperation between banks and trust companies on wealth management business that was agreed or launched prior to the issue of this Circular, commercial banks shall stringently consolidate the assets on- and off-balance sheets into balance sheets by 2011, and allocate a reserve according to the provision coverage ratio of 150%. Large banks and small- and medium-sized banks shall allocate capital according to the capital adequacy ratios of 11.5% and 10% respectively (Article 7).

clp reference:3610/10.08.12promulgated:2010-08-12effective:2010-08-12

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